Water and Effluent Treatment Magazine
Issue link: https://fhpublishing.uberflip.com/i/323013
6 WET NEWS JUNE 2014 • Adopting e-procurement procedures might be intended to promote access and reduce the cost of procurement, but utilities will see their workload increase OJEU procurement rules overhaul to impact water sector • While SMEs look set to benefit from new procurement directives, 0ne thing is certain, says Uddalak Datta, a lawyer with commercial law firm SGH Martineau, there will be more Brussels red tape. T he way businesses operat- ing in the water, energy, transport and postal ser- vices sectors procure goods and services will undoubtedly be im- pacted by a recently published EU directive on public procure- ment. Uddalak Datta, The recent political storm surrounding our continuing membership of the European Union and the growing public disquiet has ensured every new EU directive receives extreme scrutiny. So the recently pub- lished EU public procurement directives, issued in good faith but with a number of unex- pected consequences, will do lit- tle to appease the Euro-sceptics, as UK businesses suffer yet more Brussels red tape. How public bodies across Europe buy goods, services and works is regulated by EU public procurement rules, which have the laudable aim of guarantee- ing equal access to and fair com- petition for public contracts within the EU market. There are a number of changes introduced in the new measures, but perhaps the most significant is the increase in legal certainty. Public procure- ment directives and their imple- mentation in the UK have been superceded by judicial decisions of the European Courts, based on general EU principles, which means it can be difficult to understand the precise content of the obligations as the legisla- tion does not provide a complete regulatory code. These recently revised direc- tives attempt to remedy this situ- ation by codifying decisions of the European Court. These measures include: • Clarifying the concept of conflicts of interest and the measures required to pre- vent, identify and remedy them • Clarifying the circum- stances under which a modification to an existing public contract is allowed and when, on the contrary, it must be considered to be a new contract requiring a re-tender • Clarifying the circum- stances when public bod- ies can pool their service delivery activities without having to go out to tender • The distinction between the criteria used for the two-stages of contract award (the selection of ten- derers and award of the contract), has been made more flexible, with con- tracting authorities now able to consider the organi- sation and quality of the staff assigned to perform the contract • Reasons for excluding can- didates and tenderers have been reviewed and clari- fied, allowing contracting authorities are to exclude economic operators that have shown significant or persistent deficiencies in fulfilling previous contracts The new directives have increased the scope of contracts subject to detailed regulation; imposing additional red-tape for a range of services, which have been subject to a less stringent regime in the past. Currently, the procurement of service contracts is divided into two: Part A services are subject to a detailed regulatory regime; and Part B services are subject to a lighter touch regime. Service concession contracts, ostensibly excluded from regulation alto- gether, are subject to a vaguer obligation to advertise and com- petitively procure on a compara- ble basis. However, the revised package will abolish the current distinction, subjecting all ser- vice contracts to the more detailed procurement process, with service concession con- tracts regulated separately. The revised directive offers two new procedures for procur- ing public contracts: the 'com- petitive procedure with negotiation' and the 'innovation partnership' procedure. Both allow a certain degree of flexibil- ity, with the 'innovation partner- ship' aimed at the procurement of an innovative product, service or works that cannot be realised by a commoditised product. The 'competitive procedure with negotiation' provides for more flexibility than the com- petitive dialogue procedure per- mits, but we await the detail to be revealed in the final text. Clearly the intention was to make the new procedures more SME-friendly, with contracting authorities encouraged to divide the required works or services into smaller lots. The turnover requirement for businesses com- peting for contracts has been cut to just twice the estimated con- tract value, within reach for many smaller companies. However, the administrative burden will increase for utility companies as they will now spend more time splitting con- tracts and assessing a greater number of bids. Also, the move to adopt e-procurement procedures, requiring publication and com- munication with bidders to be undertaken electronically, might be intended to promote access and reduce the cost of procure- ment, but will inevitably increase the workload for utility YOU SAY "The revisions to OJEU procurement rules will come as welcome news. In its current guise, the OJEU process is cumbersome, time-consuming and admin-heavy, often impeding smaller businesses from bidding for significant public sector contracts. By cutting back the red tape, speeding up the process and creating a fairer landscape for tendering these reforms are a step in the right direction that will benefit the whole construction industry. Given that many smaller contractors feel excluded from larger frameworks because of their size, simplifying procurement rules will help more SMEs gain access to work." Rebecca Sperti, director, Constructionline "The adoption of the directives into national law will provide a platform for public authorities to optimise their use of public procurement thus providing the stimulus package necessary for investment in public services going forward. Only time will tell whether the new regime will have the desired effect of expanding and streamlining competition on an EU platform" Mark Varian, Eversheds News+ companies. Whilst there is an appetite for change within the sector, these new direc- tives will necessitate a significant adjust- ment in the commercial and project plan- ning activities of the utility companies, as they will now have to publish all the pro- curement documents at the time of the ini- tial advertisement. Procurement teams will now have to engage with their professional advisers far earlier in the process, as they will be unable to develop the contract in the time between advertising the work and selecting bidders, as happens now. Additionally, we are awaiting details of how the UK will implement the new direc- tives. The coalition government has previ- ously stated that it opposes the idea of 'gold-plating' regulations that implement EU directives. However, there is pressure to use procurement as a tool to implement wider policy objectives, such as regulating zero hours contracts and increasing appren- ticeships and skills. This transfers the bur- den of employment regulation to buyers in those areas where government is not brave enough to implement a 'first best' solution for regulating bad employers through employment legislation. Good intentions aside, these appear to be more regulations devised by professional civil servants with little experience of the commercial world. This attempt to increase legal certainty and social objectives has unfortunately brought with it the weight of additional regulatory requirements. By attempting to increase transparency and extract best value from suppliers, the EU has only added to the confusion – and it comes at a time when the UK water industry has bigger fish to worry about.